When governments present their annual budget it is usually a drab affair, watched only by policy wonks.
Not so in India, where budget day is widely anticipated. And Thursday’s statement was the biggest one in years: a new government led by Prime Minister Narendra Modi promising to use his rare, sweeping majority in parliament to kick start growth.
So, how did his finance minister, Arun Jaitley, do?
If stock markets are an indication, the budget didn’t move the needle. After soaring 25% in six months on expectations that a Modi-led government would push through major economic reforms, the main stock index closed down 0.28%.
Jaitley was upbeat, calling his budget “only the beginning of a journey towards sustained growth of 7-8 per cent,” up from a recent rate of below 5%.
But he was also guarded in his optimism, saying “it would not be wise” to expect quick results.
On subsidies — which have nearly doubled as a percentage of GDP in the past 6 years — Jaitley proposed to “overhaul” the system but provided few details.
Economists have been calling for the government to do more to encourage foreign investors. To that end, Jaitley said he would increase the cap on foreign investment in defense manufacturing to 49% from 26%.